USDCAD dipped aggressively over the previous consecutive three days, which have taken the pair below the 20- and 40-simple moving averages (SMAs). The sharp sell-off, drove the pair below the 23.6% Fibonacci retracement level of the upleg from 1.2060 to 1.3385, near 1.3072.
The momentum indicators are supportive of the bearish picture in the short-term, with the RSI holding in the negative territory below 50 but is sloping slightly to the upside. The MACD has dropped below the trigger line and is strengthening its negative movement below the zero line.
Immediate support is being provided by the 38.2% Fibonacci mark of 1.2880, which is acting as major obstacle for the bears. If prices dip lower of this area, the next support would likely come from the 50.0% Fibonacci around the 1.2730 barrier, taken from the low on May 11. A drop below the 50% Fibonacci level would signal the start of a deeper bearish phase, challenging the medium-term rising trend line again.
In case of an upward attempt, dollar/loonie would likely meet resistance at the 20- and then at the 40-SMA, currently around 1.3030 and 1.3060. A break above these levels and the 23.6% Fibonacci would send prices until the 1.3230 resistance level, identified by the September 6 high. Further gains would push the market until the 1.3290 level.
In the medium-term, the bullish outlook remains intact as the pair stands above the ascending trend line, which has been holding since September 2017. The short-term downside pressure would be erased if the price surpasses the 1-year high of 1.3385.